Clothing and footwear in the CPI

This article explains the sources and methods used to compile the clothing and footwear subgroups of the CPI. The clothing and footwear subgroups had a combined expenditure weight of 4.48 percent in the consumers price index (CPI) at the June 2008 quarter.

Position in the CPI structure

Within clothing and footwear, nearly one-third of expenditure is for clothing items with prices collected only in summer (that is, summer seasonal items and summer fashion items), while about two-fifths of clothing expenditure is collected all year round. The remaining quarter is either collected in winter or at the start of the school year (school uniforms).

Expenditure weight estimation

This section explains how the expenditure weights for clothing and footwear were estimated.

The Household Expenditure Survey (HES) estimates of expenditure on clothing and footwear appear to be significantly understated. This may reflect under-reporting by respondents and/or issues with how information is collected.

The approach used to derive the CPI clothing and footwear expenditure weights involved the following steps:

1. using the HES to determine the ratio of apparel sales to all sales at clothing stores, department stores, footwear stores, and sports stores
2. applying these ratios to Retail Trade Survey (RTS) disaggregated sales figures for the equivalent storetypes
3. adding GST
4. removing out-of-scope spending (such as that by international visitors and businesses)
5. adjusting HES expenditure for apparel items by the ratio of HES expenditure to adjusted RTS expenditure at the storetype level.

Benchmarking HES expenditure to the RTS contributed about one-quarter of the 2008 CPI expenditure weight for clothing and footwear.top

Sample selection

The sample of outlets that prices are collected from for clothing and footwear was last reselected as part of the 2006 CPI review. The sample of clothing and footwear outlets was reselected in each of the fifteen urban areas surveyed for the CPI.

One significant characteristic of the clothing and footwear sample of items is that these are categorised into those available all year round, and those that are collected only in particular seasons (due to strong seasonal availability of the items or fashion 'seasons'). Of those categorised as seasonal items, these are further split into seasonal items and fashion items.

Winter items

Items collected for women's winter fashion include:

• shirts
• trousers
• skirts
• jerseys/cardigans
• jackets/blazers.

Other winter seasonal items include:

• men’s clothing
• men's jackets
• women’s nightwear
• boys' clothing
• girls' clothing.

Women’s shoes/boots are also included with the winter seasonal items.

Summer items

Items collected for women's summer fashion include:

• shirts
• trousers
• jerseys/cardigans
• swimwear.

Other summer seasonal items include:

• men’s clothing
• women's nightwear and t-shirts
• boys' clothing
• girls' clothing.

Women’s sandals are also included with the summer seasonal items.

Clothing and footwear items collected all year round

Clothing and footwear items that are collected all year round include:

• men's suits
• men's business shirts
• men's and women's trousers and jeans
• boys' clothing
• girls' clothing
• underwear, hosiery, and socks
• infants' clothing (eg singlets and stretch-and-grow suits)
• clothing accessories (eg belts and men's ties)
• men's business and casual shoes
• sports shoes
• children's footwear.

Other items collected all year round include:

• knitting and sewing supplies (eg dress fabric and knitting wool)
• clothing services (eg dry-cleaning). top

Price collection

The majority of clothing and footwear items are collected quarterly, while the remainder are collected seasonally, as some clothing and footwear are generally available only in summer or winter. Women's winter fashion, winter seasonal clothing, and winter seasonal footwear are priced in the June quarter, and women's summer fashion, summer seasonal clothing, and summer seasonal footwear are priced in the December quarter.

The price collection of winter and summer fashion is timed to ensure that price collectors are collecting prices at the beginning of the winter or summer fashion 'season'. This is usually around October/November for summer fashion, and April/May for winter fashion. The other winter or summer seasonal items are collected with the regular quarterly price collection that is undertaken in the middle month of the quarter.

Furthermore, school uniforms are priced at the beginning of the school year and included in the March quarter.

The summer seasonal items are collected from about 80 clothing stores, 25 department stores, 65 footwear stores, and 10 sports stores, while the summer fashion items are collected from about 50 clothing stores and 20 department stores.

The winter seasonal items are priced from about 75 clothing stores, 25 department stores, and 60 footwear stores, while the winter fashion items are collected from about 50 clothing stores and 20 department stores.

Every quarter, prices are collected for a range of women's clothing, clothing accessories, men's clothing, children’s clothing, infants' clothing, adult's footwear, and children's footwear in about 140 clothing or lingerie stores, 45 department stores, and 65 footwear stores. Women's hosiery prices are also collected monthly from 75 supermarkets. 

Estimation

In each of the 15 regions where prices are surveyed, an elementary aggregate index is calculated for each clothing or footwear item by calculating weighted average prices using storetype weights derived from the HES.

The elementary aggregate indexes for the 15 regions are then combined to calculate the New Zealand item-level indexes, using regional price movements weighted by regional population-weighted shares of the national expenditure weight. Each region is assumed to have the same spending pattern (ie the same goods and services are price-surveyed in each region and they are given the same relative importance within each region). The population of each regional council area (or a proportion of it) is assigned to the most appropriate of the 15 urban areas priced in the CPI.

Where prices for seasonal and fashion clothing are collected only once a year, prices for the intervening quarters are 'imputed' by carrying forward the last observed price. That is, no price change is shown when prices are not observed. When prices are next collected, the price change shown in the CPI is the movement from when prices were last observed a year earlier.top

Quality assurance

Clothing, and to a smaller degree footwear, presents a significant challenge when the individual item being priced over time changes in quality; either due to changes to the style of the item being priced or item replacement. This challenge arises due to the definition of quality with respect to fashion or style, where the same item over time would not be of 'constant quality' (a fundamental principle of a price index is that items priced should be of constant quality). Generally, each year between one-fifth and one-third of prices require quality adjustment of some sort.

The quality adjustment performed depends on the nature of the change, considering the fashion element of the item. If the fashion element of both items is considered to be 'same' (even though the given style may have changed slightly), these items are considered equivalent. For items that are too dissimilar in style and fashion, a quality adjustment is estimated to remove the price difference associated with quality.

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